Dive Brief:
- Dollar General has automated its South Carolina distribution center to help replenish stores, CEO Jeffery Owen said in a Q2 earnings call
- Once fully operational, the technology will enable Dollar General to process thousands of additional SKUs while improving its storage inside the facility, lowering overall costs, the CEO told analysts.
- The South Carolina distribution center is the retailer’s first to receive the wide-scale automation. Dollar General plans to add the technology to more facilities moving forward and to invest $25 million in other areas, such as an improved inventory demand forecasting which will support both its stores and distribution center.
Dive Insight:
Dollar General is focusing on optimizing its distribution network as part of its supply chain growth strategy.
"We think we're well positioned on supply chain efficiencies with structural improvements on the horizon,” EVP and CFO Kelly Ditts said in the earnings call, while highlighting the company’s efforts on automation and its private fleet strategy.
Efforts to streamline its distribution network have reaped benefits: In-stock levels and on-time delivery dates from its facilities have returned to normal levels, Owen said on the earnings call. Dollar General also expects benefits from the expansion of its private tractor fleet, which the retailer plans to grow from 1,800 to 2,000 by the end of 2023.
The retailer is further expanding its capacity with the addition of multiple distribution centers in Nebraska, Georgia, Texas and New York, with three facilities under construction in Colorado, Arkansas and Oregon, according to the Q2 earnings call.
The announcements show some of the ways Dollar General has accelerated efforts to improve its supply chain in the past few months.
Last month, the retailer opened its first dual distribution center focused on its DG Fresh supply chain models, a multi-phased shift to self-distribution of frozen and refrigerated products. The company also promoted Rod West to EVP of global supply chain to lead Dollar General’s distribution center operations, transportation, supply chain modernization and private fleet.
The discount retailer is not slowing down next year, either. Dollar General plans to “add significant incremental capacity in 2024,” to drive further benefits, Owen said.
